e-Forex Magazine | FX on Exchanges | Exchanges align for new FX business
FX on Exchanges : Exchanges align for new FX business
First Published in e-Forex Magazine July 2011
While volumes continue to grow, the worlds derivatives exchanges are busy tweaking their FX contracts and launching new instruments in the light of the current regulatory debate over mandatory requirements for clearing bilaterally traded OTC contracts, as well as the general push to get as many of the standard OTC contracts traded on exchanges as possible.
New contracts from ICE
The IntercontinentalExchange (ICE) has launched ten currency pairs to add to the larger sized contracts in its existing portfolio. The larger contracts are more akin to exchange-traded contracts and will sit alongside the smaller contracts (€100,000).
ICE purchased the New York Board of Trade, and a thriving FX business, almost five years ago and the selling point at the time was that the FX products were all priced exactly to the way they are priced in the cash and EFP business. However, competing exchange Chicago Mercantile Exchange (CME) has built substantial volumes in screen traded activity by offering larger sized contracts (€125,000) as well as the €100,000/£62,500 contracts.
Ray McKenzie, vice president of ICE Futures U.S., says: "The dollar index has been very successful for us and we have seen such substantial growth - nearly 40,000 contracts a day last month, compared to 6,000 a day in May 2010 - that many of our customers trading the index have said if we matched CME's sized contracts in the euro and sterling, we would get a lot more business from them on the ICE platform because they like the speed of the platform and the lower fees. They also like the fact they would be able to cross margin currencies against the dollar index."
